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Banks 'should honour new PPI rules'

Banks 'should honour new PPI rules'

5 min read

December 2, 2010

New rules aimed at ensuring that complaints over controversial payment protection insurance are handled properly should be honoured by banks, according to the Financial Services Consumer Panel (FSCP).

The statutory body urged the banking sector to follow the guidance issued by the Financial Services Authority (FSA).

The City watchdog introduced the rules in order to prevent so many mis-selling claims being rejected by payment protection insurance (PPI) providers, only to be upheld later on by the Financial Ombudsman Service when angry consumers appeal against the decision.

But according to some reports, many of the financial institutions are refusing to accept the guidance because of an ongoing judicial challenge over a separate set of FSA regulations.

Adam Phillips, chairman of the FSCP, said: "Consumers deserve to have their complaints taken seriously. Firms should not hide behind the judicial review to effectively put complaints on hold.

"The financial services industry has seriously let down its customers by dragging its feet on PPI and it is time for firms to clean up their act.

"The Panel call on those firms who are committed to their customers to state that they comply with the new guidance and will continue to deal with complaints."

It was not possible to contact anyone at the British Bankers' Association but a spokesman told the Financial Times that most of its members would not be applying the new rules while the judicial review on the wider reforms was ongoing.

He said: "While there is a legal challenge, the issue of implementing the rules falls away."